the speculator- eureka report , aus

A positive update on Scotgold’s Cononish gold/silver project has underpinned a modest rise in the share price from a low of 7.6c last week to 8.3c today.
Australian Mining Consultants (UK) Ltd has delivered the results of a commissioned development study on Scotgold’s (SGZ) 100%-owned Cononish gold/silver project in the Grampian highlands of Scotland.
It suggests “robust project economics” using a conservative base-case gold price of $US1100/oz, with £23.4 million ($A35.7 million) pre-tax cash flow over the life of the mine, a pre-tax internal rate of return (IRR) of 24.8% and a net present value (NPV) of £10.8 million ($A16.2 million).
But with a gold price of $US1655/oz (at the time of releasing the report late last week) it projects a pre-tax cash flow over the life of the mine of $A100.7 million, a pre-tax IRR of 62.5%, a NPV of $A61.9 million and payback after 18 months from the start of production. The world gold price has slipped slightly since then to $1634/oz.
Projected operating costs of $A575/oz leave a wide margin for a positive cash flow in both gold price scenarios.
An infill drilling program is underway, with results due next month when Scotgold also expects to be granted a Crown mining lease, after which the present development study will be updated.
The present “mine inventory” (derived from measured, indicated and inferred resources) has been estimated in accordance with the JORC (Joint Ore Reserves Committee) by Snowden Mining Industry Consultants Pty Ltd. It stands at 427,900 tonnes grading 10.2grams/tonne gold and 37.1 g/t silver with a cut-off grade of 3.5g/t gold. It may not strictly comply with the JORC code.
Provided the world gold price doesn’t suddenly tumble, Scotgold’s share price can look forward to further recovery following the granting of the mining lease, further project updates and the aim, subject to finance, of a start on development in the last quarter of calendar 2012. It will then be Britain’s only producing gold mine and retains targets around the present project for further discoveries.